Some Pinduoduo Inc. (NASDAQ:PDD) shareholders are probably rather concerned to see the share price fall 39% over the last three months. But in three years the returns have been great. The share price marched upwards over that time, and is now 162% higher than it was. After a run like that some may not be surprised to see prices moderate. The thing to consider is whether the underlying business is doing well enough to support the current price.

So let's investigate and see if the longer term performance of the company has been in line with the underlying business' progress.

Check out our latest analysis for Pinduoduo

Because Pinduoduo made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

In the last 3 years Pinduoduo saw its revenue grow at 67% per year. That's much better than most loss-making companies. Along the way, the share price gained 38% per year, a solid pop by our standards. But it does seem like the market is paying attention to strong revenue growth. Nonetheless, we'd say Pinduoduo is still worth investigating - successful businesses can often keep growing for long periods.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

Pinduoduo is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. If you are thinking of buying or selling Pinduoduo stock, you should check out this free report showing analyst consensus estimates for future profits.

A Different Perspective

Over the last year, Pinduoduo shareholders took a loss of 62%. In contrast the market gained about 21%. Of course the long term matters more than the short term, and even great stocks will sometimes have a poor year. Fortunately the longer term story is brighter, with total returns averaging about 38% per year over three years. The recent sell-off could be an opportunity if the business remains sound, so it may be worth checking the fundamental data for signs of a long-term growth trend. It's always interesting to track share price performance over the longer term. But to understand Pinduoduo better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for Pinduoduo you should be aware of.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.